Top Stocks Based on Momentum/PEG

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 |  Includes: AAON, AEO, AFAM, ARO, BWLD, CBEH, CHSI, CPLA, CTCM, DDMX, DECK, ESV, EZPW, FCFS, HSTM, HUM, IDCC, JOSB, LHCG, MA, MANT, MD, MNK, PTI-OLD, STRA, TRLG, USNA, USPH, WDC
by: Scott's Investments
I have begun conducting the following screen on a monthly basis. Early out-of-sample results have been positive, especially in a bullish environment like the current one. March's list is here, February's list is here and January's here. The screen looks for the following:
    • earnings growers still reasonably priced as judged by the PEG ratio
    • low debt
    • a history of high return on equity and investment, and
    • price momentum as gauged by the percentage the stock is trading to its 250 day high.
January's list returned 1.39% vs .57% for SPY. February's list returned a solid 11.78% vs. 6.77% for SPY. March returned 7.91% vs. 4.23% for SPY. I have also started tracking returns of the top 10 stocks at the beginning of each list, the top 10 are selected based on fundamental factors. The top 10 on March's list returned an average of 10.77%. The top return stock on March's list was Joseph A Banks (NASDAQ:JOSB) , which returned over 24% in one month. For the full list of stocks and results, please see the right hand side of Scott's Investments.

With the US equity markets near an 18 month high, this list will be more expansive than in other, less bullish periods since it looks for stocks near 250 day highs. It has tested well historically in bullish periods. Strategies an investor could use to avoid drawdowns would be to either a) abandon this type of strategy entirely when the S&P 500 or another major index is below a long term moving average, or b) hedge positions with a short option strategy on an equity index or ETF like SPY.

Two possible tools an investor could use to conduct this screen on his/her own are stockscreen123 or Finviz. This screen was conducted using stockscreen123.

Ticker Name Trend Analysis Last
WDC Western Digital Corp. Here 44.71
EZPW EZCORP, Inc. Here 23.31
MDF Metropolitan Health Networks, Here 3.12
OTCPK:CBEH China Integrated Energy, Inc. Here 11.53
PTI-OLD Patni Computer Systems Limite Here 25.76
USNA USANA Health Sciences, Inc. Here 34.72
DECK Deckers Outdoor Corporation Here 157.21
HSTM HealthStream, Inc. Here 4.85
MD Mednax Inc. Here 57.02
MANT ManTech International Corpora Here 50.36
AFAM Almost Family, Inc. Here 39.4
ARO Aeropostale, Inc. Here 31.88
AAON AAON, Inc. Here 23.95
TRLG True Religion Apparel, Inc. Here 33.11
AEO American Eagle Outfitters Here 18.14
FCFS First Cash Financial Services Here 23.49
LHCG LHC Group, Inc. Here 36.51
IDCC InterDigital, Inc. Here 28.94
JOSB Jos. A. Bank Clothiers, Inc. Here 64.13
USPH U.S. Physical Therapy, Inc. Here 18.03
CHSI Catalyst Health Solutions, In Here 45
DDMX Dynamex, Inc. Here 17.95
CTCM CTC Media, Inc. Here 19.53
MA MasterCard Incorporated Here 267.22
CPLA Capella Education Company Here 93.51
ESV ENSCO PLC Here 51.95
STRA Strayer Education, Inc. Here 253.03
BWLD Buffalo Wild Wings Here 51.33
QCOR Questcor Pharmaceuticals, Inc Here 8.21
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Disclosure: No positions in stocks mentioned